Dave Cliff, Professor of Computer Sci at Bristol spoke to Waters Power:09 in Canary Wharf yesterday. It is clear from many sources that IT is changing and he examined some of these changes. He woke me up by quoting Carlota Perez who argues that there are five transformational changes since the industrial revolution, Steam, Railways, Electricity, internal combustion and IT. She also argues that the adoption and maturity cycles are similar, and Cliff argues that “money’s out of IT now”. Her book is called “Technological Revolutions and Finance Capital:The Dynamics of Bubbles and Golden Ages”, which gives on an idea of where she’s coming from. Cliff also pointed his audience at Nick Carr’s “The Big Switch”, another pundit that argues that IT is done! …
Where did the Tobin Tax come from?
Lord Turner certainly made a splash last week with his comments on the social value of banks and support for a ‘Tobin Tax’. Larry Elliot of the Guardian, offered us his thoughts in an article called “Forgotten brainchild that could transform the banking casino”. According to Elliot, Tobin argued …
Free software, fairness and scientists
I have just posted my final blog posts to my Sun blog, including one called Free, the right price for software. (Now republished on this blog,as Free, the right price for software.) This uses a Welfare Economics approach to argue that the correct price for software is free. This is designed to be an abstract for an essay I have promised myself, which will also be the basis for my evidence to the UK Government Consultation on regulating and restricting file sharers. This article briefly looks at economic equity, efficiency and academic publication regimes.
Two points that I failed to put in the abstract, are firstly that economists see equity, as in fairness, as having two dimensions and that paying people with the same skills and abilities different amounts is inefficient and thus sub-optimal but arguing about the fairness of paying differently skilled people different amounts is the domain of politics. Efficiency tries to remove considerations of political equity from the model. It’d be interesting to see if this can be worked into the essay; why is Tom Cruise paid so much?
The second issue is that pure science research has to be published, peer-reviewed and refereed before it is adopted. Sharing knowledge for free is what professionals and scientists have been doing for years, why is software and the media any different. I hope to work these questions into the essay. …
Free, the right price for software
Economic systems are about how to use scarce resources and the Price Mechanism is the way in which a optimal resource allocation occurs. Economists use a branch of theory called “Welfare Economics” to analyse and model the efficiency of the productive economy, and a theoretically maximally efficient set of states can be defined within a model, known as the Pareto-efficiency frontier. A perfectly competitive market meets the efficiency requirements, imperfect or distorted markets do not. Distortions can be caused by the existence of monopolistic markets, taxation, externalities or missing markets.
Traditional Welfare economics rarely considers how copyright and patent law create barriers to entry to markets and thus husband the growth of monopolistic markets, where supply is restricted and prices driven up. It needs to be born in mind that overpricing products such as software which are inputs to the economic process as well as output, means that some otherwise efficient goods will not be produced; they cost too much.
It should also be born in mind that the majority of the world’s software is not licensed or charged for, although much of this free to use software is not traded at all, remaining the proprietary goods of their owners who use them to produce other goods and/or services. Benkler in his book, “the Wealth of Networks”, suggests there are nine business models for pursuing value in software, of which only three of them involve trading rights i.e. charging for software. If there was no software copyright i.e. copying was legal and free the only price, software would still be written. The overpricing of software distorts both today’s market and the innovation creating tomorrow’s. The price mechanism should ensure that resources that are scarce and consumed should be payed for. Software is not scarce, although the people that write it and the machines that run it are. Resources such as software should be free.
This was meant to be an essay based on some slides I have been trailing inside the company, but I discovered how hard it is and how much time it takes to actually put ideas into essay form while preparing the paper behind what became Monopoly & Prices, see below. So this is more of an abstract, I shall upload the essay when finished to my personal site downloads page, actually to a landing page on this blog.
Thanks once again to Beggs, Fischer and Dornbusch, whose Economics 8th Edition reminded me of my Welfare Economics.
ooOOOoo
This is a reprint of an article originally published on my sun blog. It was copied to this site on 3rd August 2013. much earlier than most. …
Monopoly and prices
Monopolies restrict supply and offer their goods at prices above equilibrium price, the opportunity cost of the resources used to make the goods. I am writing a short paper about this since it is a piece of thinking I revisited while developing my thoughts on free software, but is not central to those thoughts. There remain those who still think that monopolistic domination of markets is a legitimate business goal and that public policy and regulation should not inhibit this “free” market tendency. A review of the theory of the firm shows that monopolies restrict supply, raise prices and make super-profits. …
Are liberal licenses a better future proofing
A couple of days after the Kable Open Source conference, I looked up Gianugo Rabellino’s blog and read his then most recent blog article, “Of Oracle, Sun and Open Development” about the impact of M&A on open source investment protection.
The conclusion I draw from his article is that open source adopters need to make investment protection a selection criteria. Its well understood that the vibrancy of the product community is crucial, so its just obvious that taking a view on the future is as important. Gianugo also argues that liberal licenses enhance the ability of a community to survive M&A activity. I think he’s probably right, and this means that license terms might become important even to end user sites who have no intention of distributing software. It may also be worth measuring how diverse an open source development community is before adopting the software. …
Open Source in the Public Sector
I attended Kable’s “Open Source in the Public Sector” 2009 conference and captured and published my notes at my original Sun now Oracle blog, the hyperlinks are listed below. I have reproduced and edited the articles here. This is backdated to the date of occurrence. The main changes are to repair some lost hyperlinks i.e. those that disappeared when Oracle acquired Sun Microsystems. Interestingly Liam Maxwell, who became the Deputy CIO for the UK Government spoke on Government and procurement but I didn’t consider his points worth recording. Shame on me. DFL 25 Jan 2014 …
Barcelona
I travelled to Barcelona with Mrs L. and on my return went up to London and travelled by Tube to deliver a presentation to Kable’s “Open Source in the Public Sector”, which reminded me of the weekend in Barcelona, both the prices and experience were better in Spain, although I didn’t travel on the Metro during a rush hour. As I landed, the day before, I received a message that Oracle had bid for Sun Microsystems, I also reflect on the helpful people at Heathrow. This post includes a slide show of my Barcelona pictures. …
Open Source, the price is right
I shall be speaking tomorrow on “Open Source, Free the right price!” and shall be posting my slides here. I have been busy reading up my undergraduate economics to remind me of what I learned then and check that it hasn’t changed. I borrowed Beggs, Fischer and Dornbusch’s “Economics”, since I got rid of my text books years ago and this seems to be the modern equivalent. The presentation covers some theory of the firm, poses community vs. a supply chain, IP Law and its impact on the software supply chain and finishes with some conclusions about free. …
Consumerism & Sedimentation in the IT industry
A think piece on the effect of consumerisation in the datacentre, it ends looking at consumer market share battles and asking why the ISPs care about brand; I suppose it’s because consumer sales organisations like Apple and Google, to preserve their brand value are dis-intermediating the Telcos and NEPs/system vendors from the supply chain. …